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Bar tax concessions from high super balances: ASFA
Those with very high account balances should not be eligible for superannuation tax concessions, the Association of Superannuation Funds of Australia (ASFA) argued.
The super body released a report proposing that once a super account hits a certain amount, questions arise as to whether the account holder should still be eligible for a tax concession to accumulate enough income for a “dignified retirement”.
Using the ASFA Retirement Standard, the report said account balances over $2.5 million per person should not be eligible for the same tax concession rates as someone below this amount.
ASFA CEO Pauline Vamos said this would ensure people are using their super for retirement rather than for estate planning purposes or wealth accumulation.
The report found 75 per cent of tax concessions applied to contributions go to those paying either 30 per cent or 38 per cent marginal tax rate.
But when it came to tax concessions in super investment earnings, a huge chunk of tax concessions flow to middle-to-high income earners, with 65 per cent going to those earning over $80,000 and 23 per cent going to those earning more than $180,000.
The report also recommended lifetime caps for non-concessional contributions should be introduced.
Currently people can contribute a maximum of $540,000 every three years in non-concessional contributions.
The report said lifetime caps would let people amass enough funds for a comfortable retirement while not providing tax concessions on earnings for very large balances.
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